Saudi Arabia has proposed the first universal deal in over a decade to help clear the oil glut

Russian
Energy Minister Alexander Novak attends a session of the Gaidar
Forum 2016 'Russia and the World: Looking to the Future' in
Moscow, Russia, January 14, 2016.Sergei Karpukhin/Reuters

Russia said on Thursday that OPEC kingpin Saudi Arabia had
proposed global oil production cuts of up to 5 percent in what
would be the first universal deal in over a decade to help clear
a glut of crude and prop up sinking prices.

Benchmark Brent futures jumped as much as 8 percent to nearly $36
a barrel on news of the potential deal, which if implemented
would immediately reduce surplus global output exceeding demand
by 1 million barrels per day (bpd).

Russian Energy Minister Alexander Novak said Saudi Arabia had
proposed that oil-producing countries cut production by up to 5
percent, which for Russia - the world's top producer - would
represent around 500,000 bpd.

"Indeed, these parameters were proposed, to cut production by
each country by up to 5 percent," Novak said. "This is a subject
for discussions, it's too early to talk about."

Novak also told reporters there was a proposal for a meeting
between the Organization of the Petroleum Exporting Countries and
non-OPEC nations at the oil minister level and that Russia was
ready for such talks.

"There are lots of questions about the oversight over cuts," he
added.

Oil sank to 12-year lows around $27 a barrel earlier this month,
from as high as $115 some 18 months ago, on the back of a U.S.
shale oil boom and a decision by OPEC to pump more to fight for
market share against higher-cost producers.

An
employee fills a container with diesel at a gas station in Riyadh
December 19, 2012Fahad
Shadeed/Reuters

The repercussions of oil's plunge are huge, with some oil-rich
nations forced to devalue their currencies - Russia's rouble hit
an all-time low. Street protests have flared in Azerbaijan and
markets remain jittery over a potential default by OPEC member
Venezuela.

Saudi Arabian officials did not immediately comment on the
proposal but a senior Gulf OPEC delegate said: "Gulf OPEC
countries and Saudi Arabia are willing to cooperate for any
action to stabilize the international oil market."

"You have to take this seriously now. Key will be if Russia can
deliver," said Gary Ross, a veteran OPEC watcher and founder of
U.S.-based Pira group.

Brenda Kelly, head analyst at London Capital Group, said the
proposed cuts were unlikely to happen.

"There have been attempts in the past that have come to
(nothing). Saying something about the oil price and doing
something are very different things, and it seems like panic
given the price drop."